Player Company Sold Inventory Costing $900 for $1,400 on Account

Multiple Choice

Player Company sold inventory costing $900 for $1,400 on account. If Player Company operates under the accrual basis, what effect will the transaction have on the liabilities and owners' equity side of the balance sheet?

A) There will be no effect since the sales and/or cost of goods sold are income statement accounts.
B) Owners' equity will decrease by $900.
C) Owners' equity will increase by $500.
D) There will be no effect since the customer to whom the inventory was sold has not yet paid.